Executive Chair overturns LAT decision: EOB Clear and Unequivocal - GP and Aviva Insurance Company of Canada LAT 16-000726

December 05, 2017, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

GP and Aviva Insurance Company of Canada LAT 16-000726 2017 CanLII 77379 (ON LAT)

Decision Date: November 8, 2017
Heard Before: Linda P. Lamoureux, Executive Chair
RECONSIDERATION DECISION TO ALLOW IRBs: Tribunal erred in original decision; EOB clear and unequivocal; applicant fails to apply within permitted timeline

On February 13, 2017, the LAT issued a decision on a preliminary question in a matter originating under the SABs between GP and Aviva. GP received IRBs for approximately a month, until she returned to work. In 2015, more than nine years after the accident, she applied to Aviva to reinstate her IRBs on the basis that her condition deteriorated. Aviva refused.

The issue before the Tribunal was whether GP should be allowed to proceed to the Tribunal to dispute her entitlement to IRBs. More specifically, the question at issue was whether GP properly filed her application within the limitation period mandated in s. 281.1 of the Insurance Act and s. 51 of the Schedule.

The Tribunal assessed Aviva’s termination of IRBs in 2006 as the triggering event for the commencement of the limitation period. The Tribunal found that Aviva did not comply with the requirements of a proper and valid notice that an insurer must provide to an applicant when refusing to pay for an applicant’s benefits. As a result, the limitation period did not begin to run and GP was not out of time to dispute her claim. On this basis, the Tribunal ordered that GP might proceed with her application disputing entitlement to IRBs.

On March 3, 2017, Aviva asked the Adjudicator to reconsider the Tribunal’s preliminary decision, arguing that the Tribunal erred in a number of ways, discussed below. On March 27, 2017, GP provided responding submissions. For the reasons that follow, the Adjudicator grants Aviva’s request for reconsideration, cancel the Tribunal’s decision and dismiss this application.

GP was injured in a car accident on August 31, 2006. She applied for and received IRBs from Aviva for only a short period – she returned to work about a month after the accident.

At the time of her accident, GP’s benefits were governed by an older version of the Schedule. On October 19, 2006, Aviva sent GP an Explanation of Benefits and a letter acknowledging GP’s eligibility for IRBs, but nevertheless indicating that Aviva was not required to pay the IRBs for any period longer than 16 weeks.  Aviva explained that this was because GP’s impairment fell within the PAF Guideline for WAD Grade II injuries under the Old Schedule.

On November 26, 2015, more than nine years after the accident, GP advised Aviva that she is completely unable to work and that her inability to work is related to the 2006 accident. GP provided a medical opinion to support her claim, and requested reinstatement of her IRBs. Aviva denied the reinstatement request on December 18, 2015.

GP proceeded to dispute the reinstatement of her IRBs at the FSCO by applying for mediation. The mediation at FSCO was unsuccessful. Thus, on June 30, 2016, GP filed an appeal pursuant to the new dispute resolution process at the LAT seeking entitlement to IRBs.

The matter proceeded to a preliminary hearing during which Aviva argued that it had already denied the IRB claim in the 2006 EoB and letter advising GP that entitlement to IRBs is limited to the PAF Guideline for WAD Grade II injuries and, as a result, her current claim for these benefits was time-barred.

GP argued that Aviva’s termination of her IRBs in 2006 was improper. She disagreed that the 2006 EoB and accompanying letter included a clear and unequivocal denial of her IRB entitlement triggering the limitation period. Instead, GP focused on Aviva’s response to her request for reinstatement of IRBs in 2015 as the triggering event for the limitation period. The Tribunal agreed with GP’s argument.

In a decision dated February 13, 2017, the Tribunal found that Aviva’s notice denying IRBs in 2006 was improper and that the triggering event for the time limitation was Aviva’s subsequent response in 2015. As a result, GP was within the statutory limitation period and, thus, permitted to proceed with her dispute.

Aviva requested reconsideration of the Tribunal’s decision. In its request, Aviva argues that the Tribunal violated procedural fairness requirements, acted outside its jurisdiction, and made significant errors of law and fact such that the Tribunal should have reached a different conclusion.

For the purposes of the analysis below, the relevant test for granting a reconsideration is set out in Rule 18.2(b) of the Tribunal’s Rules of Practice and Procedure. It states that the Executive Chair will not grant a request for reconsideration unless the Tribunal made a significant error of law or fact such that the Tribunal would likely have reached a different outcome.

Reasons

For the reasons that follow, the Adjudicator granted Aviva’s request for reconsideration and find that the Tribunal made a significant error in its decision to allow GP to proceed with her application.

The Tribunal made two errors. First, it erred in determining that Aviva’s denial of IRBs in 2006 was improper. Second, it erred in determining that Aviva’s 2015 response to GP’s request for reinstatement was the new triggering event for the limitation period. These errors were significant enough, in the language of Rule 18.2(b), that in the absence of these errors, the Tribunal would likely have reached a different decision.

Aviva’s written notice in the 2006 EoB and accompanying letter met the requirements outlined in the Schedule. It clearly and unequivocally communicated to GP that her IRBs would no longer be payable after a specific date. Aviva also outlined GP’s rights to dispute the refusal, while specifically identifying the time limits to do so.

GP failed to commence a dispute pursuant to the dispute resolution regime that existed at the time of Aviva’s refusal – that is, mediation within two years after Aviva’s refusal to pay the benefit claimed. Thus, the Tribunal erred when it then allowed GP to proceed to a hearing on the issue of IRBs.

The relevant principles regarding limitation periods and an insurer’s refusal to pay benefits can be summarized as follows. While the Tribunal is not bound by FSCO jurisprudence, I found the following principles, and the cases from which they arise, persuasive and worth highlighting:

• the notice provided to an applicant communicating an insurer’s decision to terminate or refuse accident benefits must be clear and unequivocal, and permit an applicant to decide whether or not to challenge the denial: Turner v. State Farm Mutual Automobile Insurance Company; Zeppieri v. Royal Insurance Co. of Canada; Monks and Dominion of Canada General Insurance Company;
• the notice to an applicant of an insurer’s refusal to pay benefits must also contain, in straightforward and clear language, directed towards an unsophisticated person, a description of the most important points of the dispute resolution process and the relevant time limits that govern the entire process: Smith v. Co-operators General Insurance Co. (“Smith and Co-operators”); Sietzema v. Economical Mutual Insurance Company (“Sietzema”);
• the refusal to pay benefits may be premature and may include benefits that GP has yet to apply for or claims that have yet to crystalize: Bonaccorso v. Optimum Insurance Company Inc. (“Bonaccorso”); Katanic v. State Farm Mutual Automobile Insurance Company (“Katanic”); and Sietzema; and
• re-applying for benefits (due to relapse or fresh medical evidence) more than two years after an initial refusal will not trigger a new limitation period: Wadhwani v. State Farm Mutual Automobile Insurance Company (“Wadhwani”); Haldenby v. Dominion of Canada General Insurance Co. (“Haldenby”).

The insurer is not required to pay an income replacement benefit, for the first week of the disability (Wait Period Aug 31/06 to Sept 06/06) and for any period longer than 16 weeks (Until Dec 20, 2006) after the accident, in the case of an insured person whose impairment comes within the Grade II Whiplash Guideline, if the accident occurred after April 14, 2004. The 2006 EoB also clearly explained GP’s right to dispute and provided a description of the dispute resolution process and relevant time limits. Specifically, part 6 of the 2006 EoB stated in bold type “YOUR RIGHT TO DISPUTE THE INSURER’S DETERMINATION OF YOUR CLAIM FOR STATUTORY ACCIDENT BENEFITS” and “WARNING: TWO YEAR TIME LIMIT” followed by a further explanation that stated: “You have TWO YEARS from the date of your insurer's refusal to pay, or reduction of a benefit, to arbitrate or commence a lawsuit in court…”

Conclusion and Order

The Tribunal erred when it determined that the December 18, 2015 letter from Aiva was the effective date of denial rather than the proper refusal of IRBs on October 19, 2006 and that this error was significant enough that the Tribunal would likely have reached a different decision, pursuant to LAT Rule 18.2(b).

As a result, I find the Tribunal also erred when it allowed GP to proceed to a hearing on the issue of IRBs because the two-year limitation period for dispute had expired.

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